Check into teen checking: Good habits come early with checking accounts aimed at teens

View Video

NEW YORK -- I was standing at the window of a local bank branch, and there in front of me was a brochure I didn't expect to see: "Teen Checking Account."

At first, I ignored it. Then, while I waited, suddenly, a big "aha." Teen checking. The words go together like "low-calorie Pop Tarts," right? Turn the kid loose with a checkbook, and disaster is sure to follow.

Nope, not really. The new accounts, as described in the brochure, give "access with controls." The parent is set up as a co-owner of the account.

Wells Fargo's account was the most widely publicized version I found, but several credit unions and smaller banks offer similar products, and I expect they'll be part of the standard bank product offerings soon.

Key features

• Limited ATM/Debit card. The key word here is "limited." The kid gets a no-fee ATM/debit card, and the parent can set up a daily spending limit on the card. Checks are available, too, but come with a fee in some accounts.
• Account information and online banking. Most accounts have online access allowing for account management. There's a monthly spending report summarizing activity and fees. Automated email alerts can be set up for withdrawals or low balance if desired. Some accounts also have bill-pay features.
• Overdraft protection just in case. Some accounts come with a free companion savings account with overdraft protection from that account. The account can be linked to a second account for backstop protection. There are fees -- you should check them out and make your teen responsible.
• Educational tools. Most institutions have plenty of stuff written in teen-friendly language. Tips walk teens through how to make transactions, review balances, protect identity information and make smart financial choices.

Of course, the main point of a teen account is hardly to make spending convenient. It's to teach them at an early age to manage money. It's also to teach them to use the tools they'll use as adults to manage money. Like online banking.

And it teaches that even plastic has its limitations. The sooner that lesson gets absorbed, the better. Wells Fargo puts it well in its marketing story: "To form good fiscal habits, you have to learn them."

While teen checking could be a big part of teaching your teens the financial ropes, it's hardly the only thing you should do. Today's historic market and credit turmoil has so many lessons - about risk, about overextended credit. Share these lessons with your kids. Heck, even make a deal to lend them money to buy something, then "foreclose" if they don't pay back.

You know how I feel about this - the more financial savvy the sooner, the better. I wish today's adults had similar tools and experiences when they were young.